Montrose Management District gets earful from irate property owners

Business owner Bob Rose was behind a 2012 lawsuit challenging the legitimacy of the West Montrose Management District. A judge's decision voiding assessments collected by the district is under appeal.

Photo: Nancy Sarnoff

Business and property owners railed against the Montrose Management District Friday afternoon in a public hearing meant to highlight the group's plan for the next 15 years.

The contentious meeting was held less than a week after a district court judge ruled that the district improperly assessed nearly $6.6 million based on an assessment petition now deemed void by the court.

The Oct. 31 judgment also ordered that the district refrain from spending any money collected and not yet spent.

"That means your checkbook is closed," Andy Taylor, the attorney representing property owners, said to district officials. "I want to put you on notice. If you pass this plan I will file a motion for contempt."

The reason for the legally required meeting, held at a Montrose community center, was to hear public comment on plans to spend some $60 million on landscape maintenance, street sweeping, bike projects, marketing, branding and other improvements to the area over the next decade and a half.

An agitated crowd of about 50 people opted not to hear a presentation by executive director Ben Brewer III.

None of the district's board members were in attendance.

More than a dozen property owners spoke in protest during the spirited 3½-hour meeting. Many said they have not received any benefits from the district or its projects and that the assessments amount to double taxation. They complained that services such removing graffiti and increasing safety were promised but never provided.

"I'm just going to reiterate what everyone in this room knows: This is an unwanted district," said Daphne Scarbrough, a longtime Montrose property owner and proprietor of the Brass Maiden, a specialty furnishings store on Richmond.

"I detest vehemently how they spent the money," property owner Jim Bartley added, citing district projects such as bridge lights along U.S. 59 and signs branding the area.

Some questioned even the legitimacy of Friday's meeting given the judge's ruling.

State District Judge Daryl L. Moore ruled the assessments paid by commercial property owners in the former West Montrose Management District, now part of the larger group, were done so under duress. Moore said the district must pay back the money.

In a statement Friday, the management district said it has filed an appeal to the 14th Court of Appeals in Houston.

"The district stands by its position that it is operating within its legal charter granted by the state of Texas. No refunds for assessments collected in the West Montrose Management District (the only portion of the district under dispute in this legal action) will be made, pending the outcome of the current appeal," the group said.

The lawsuit dates to 2012, when a property owner challenged the legality of the management district.

Moore inherited the case from Judge Joseph "Tad" Halbach Jr., who left his position at the end of 2016.

Halbach found the district made unlawful assessments and should reimburse property owners, but he did not issue a final ruling in the case.

He said the assessments were void because the district board didn't have enough valid property owners who signed a petition required to begin charging the assessments.

After the district was established in 2009, organizers were required to collect signatures from at least 25 commercial property owners in the area to begin making assessments.

The Montrose Management District, which was formerly broken into east and west areas, is one of dozens in Houston created by the Legislature to promote economic development and make improvements to public areas in individual neighborhoods.

Commercial property owners help pay for the improvements through assessments. In Montrose, they are assessed at a rate of 12.5 cents per each $100 of property value.

Brewer, an employee of Hawes Hill & Associates who began his post with the district in July, said during the meeting that the district had perhaps $250,000 in its bank account.

Nancy Sarnoff covers commercial and residential real estate for the Houston Chronicle and the paper’s two websites: Chron.com and HoustonChronicle.com. She also hosts Looped In, a weekly real estate podcast about the city’s most compelling people and places. Nancy is a native of Chicago but has spent most of her life in Texas.